Finance
When an Alaska lender evaluates a borrower's creditworthiness, the 'Four Cs of Credit' include all EXCEPT:
ACapacity (ability to repay)
BCapital (down payment and reserves)
CCharacter (credit history)
DCircumstances (reason for buying)✓ Correct
Explanation
The Four Cs of Credit are Capacity (income and ability to make payments), Capital (down payment, reserves, and assets), Credit (credit history and score), and Collateral (the property securing the loan). 'Circumstances' is not one of the traditional four Cs.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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